Cognizant, the Nasdaq listed IT services company with a large employee presence in India, has lowered its revenue growth guidance for the year 2016 underscoring the impact of currency volatility and slowing global economy though its net profit for the fourth quarter of 2015 rose 6.5% on a sequential basis.
Cognizant which provides both full year and quarterly guidance has projected revenue growth in the range of 10-14% for 2016 as compared to 21% it recorded for the year 2015. The company ended 2015 with a revenue of $12.42 billion and net profit of $1.62 billion.
Even for the first quarter of 2016, Cognizant expects revenue growth to be in the range of -1.5% to 0.3%, indicating a very flattish growth. The three months between January and March is generally considered to be a strong period for the company.
For the fourth quarter of 2015, Cognizant recorded a revenue of $3.32 billion which was a sequential growth of 1.4% and was slightly above its stated guidance. Commenting on the results, Cognizant CEO Francisco D’Souza said, “At a time when major technology shifts are disrupting all industries, clients are looking to a partner like Cognizant to work with them to create the winning business models of tomorrow at the intersection of the physical and digital worlds. Our investments in disruptive technologies, new business models and best-in-class delivery uniquely position us to enable clients to drive digital transformation at enterprise scale.”
The operating profit margins of Cognizant at the end of the fourth quarter was 17.1% on GAAP basis and 19.6% in non-GAAP terms. In terms of performance from the various geographies, US, which accounted for 78.4% of its revenue at the end of fourth quarter recorded a flattish sequential growth at 0.9%. Its next biggest market – UK registered a sequential growth of 2%.
Among its verticals, the financial services segment which accounts for 40% of Cognizant’s revenue recorded a sequential growth of 1.8% while it was 1.4% from the healthcare sector.
Cognizant emphasised the importance of the digital market, which is expected to be a major growth driver for the near future. Gordon Coburn, president, said, “In 2015, we strengthened our position as a leading digital transformation partner for our clients.
While digital opportunities significantly expand our addressable market, our rapidly growing consulting, infrastructure and business process services and geographic market expansion, continue to be solid drivers of demand for our services.”
Cognizant which has around 68% of its employees based in India, made a net headcount addition of 2,400 during the fourth quarter to take its total strength to approximately 221,700.